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The Formation of the Modern East Asian Economy
For, while millions of Chinese were moving westward into the mountains of Hupeh and Szechuan, into the lowlands of Hunan, and into the plateaus of Yunnan and Guizhou, Chinese boats and merchants were establishing an unrivaled hegemony all along the coast of East and Southeast Asia. Japanese boats and merchants were now barred from going overseas. The Dutch would eventually retreat to their colony of Batavia and maintain but a minimal presence in Nagasaki.8 The Portuguese defensively clung to Macao as the sole East Asian vestige of their now-defunct maritime empire.9 The Spanish, fearing the cheap prices of Chinese goods, restricted their access to Spanish-controlled markets of the New World, thus also limiting the commercial development of the native economy of the Philippines.10 Consequently, the other countries of southeast Asia relied almost entirely on Chinese, or overseas Chinese, to handle their trade.11 To a degree that would have been unthinkable just a century earlier, the sea from Siam to Japan was overwhelmingly Chinese.

This Chinese oversea expansion not only resulted from the same population pressures that drove millions in the opposite direction of the Chinese interior. But it also entangled the Chinese economy in the landed economy of foreign states to an unprecedented extent. In 1793, the Qianlong Emperor would tell Lord Macartney that his kingdom, needing no imports, deigned to trade merely for the benefit of other nations.12 For too long this claim has been taken as fact, rather than as a piece of rhetoric more likely intended to strengthen the Chinese bargaining position in these trade negotiations. For, whereas in the sixteenth and seventeenth century, the Chinese economy and tax system had heavily depended on the import of foreign silver, so in the eighteenth and nineteenth century did it come to depend on the import of something even more basic to its survival, the import of rice. The greater international division of labor these Chinese merchants effected by linking surplus rice areas of southeast Asia with the rice-deficient provinces of Fujian and Guangdong thus immersed China into "the world economy" decades before the English grew unusually enamoured of tea and the Chinese opium. In sharp contrast to eighteenth century Japan and indeed its own rhetoric, the Chinese government recognized the necessity of relying on foreign trade for the survival of hundreds of thousands, if not millions, of its people in two of its most prosperous provinces. Thus, just as the people of eighteenth century Suzhou in the lower Yangtze delta regularly ate rice grown 1,000 miles away in Hunan and Sichuan13, so did many people in Fujian and Kwangtung come to regularly eat rice grown over 1,000 sea miles away in foreign lands.14 Out of this came not just a trade dependence but also a permanent Chinese presence in these countries. And, to a degree the European colonialists never wanted or allowed, that gave rise to a dominant merchant class of mixed bloods of Chinese-Southeast Asian origin.

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